Hokkaido Electric seeks approval for second hike in energy rates

Hokkaido Electric Power Co. is considering filing for government approval next month for plans to implement an additional hike in its electricity rates for households, it was learned Sunday.

Seven Japanese power suppliers — including Hokkaido Electric — have raised their rates following the nationwide nuclear reactor shutdown that followed the March 2011 triple-meltdown disaster at the Fukushima No. 1 power plant.

But the utility, which serves Hokkaido, would be the first to carry out a second hike in its rates.

The company may set the size of its second hike at around 10 percent, and is aiming to implement it by the end of this year, sources familiar with the matter said.

The company raised rates for households by an average of 7.73 percent in September last year after all three reactors at its Tomari nuclear plant were shut down, and the cost of thermal power generation began to weigh heavily on its balance sheet.

The reactors are currently undergoing safety screenings by the Nuclear Regulation Authority ahead of a possible restart.

Hokkaido Electric decided the margin of its earlier September 2013 hike on the assumption that the three reactors would restart operations in stages.

But it remains to be seen if and when they will be brought back online as the NRA screenings have been prolonged.

Hokkaido Electric suffered a group net loss of ¥62.9 billion in fiscal 2013, remaining in the red for the third straight year. Its financial standing would inevitably deteriorate further if the Tomari reactors remain idled or an additional rate hike is not implemented, the sources said.

The utility is considering conducting the second hike under a new, simplified and expedited screening system that allows power firms facing delays in restarting nuclear power production to quickly pass cost increases on to their customers via rate hikes. The company would be the first power supplier to make use of this system, the sources said.